Two Trees Forestry
Market update: October 2007
An up and down market
As summer 2007 began uncertainty settled over the pine sawlog market. The large pine mills put suppliers on a limited delivery quota, Tukey Bros. Lumber in No. Belgrade stopped buying rough-grade logs, and several log brokers were suggesting that loggers sell formerly-low-grade pine logs as pulpwood. In addition with prices for top grades of pine off $30 - $40 per MBF and fuel prices at relatively high rates, some pine log stumpage prices (what landowners receive) were down a bit. Fortunately as we move through the fall and into winter the situation has improved. Delivery quotas are off and stumpage prices have rebounded. In the latter's case some large producers have secured higher prices, while in other cases Two Trees has auctioned high value pine and gained price advantages.
Despite this however, the mill prices for several products have come off their 2003/04 highs, notably red oak veneer and sawlogs and spruce/fir sawlogs. We gather that the red oak's dark and "heavy" appearance has fallen out of favor with designers and homeowners, whose preferences now run to the brighter and whiter woods, such as sugar maple. This appears to be a long-term trend. In the past landowners often received $350 - $400/MBF for woods-run oak sawtimber, though now $300 - $350 is more common; similarly an average run of oak veneer logs that returned $800 to landowners a few years ago now brings closer to $700.
As many of you are aware, homebuilding is down across the country, and thus fewer spruce/fir-derived 2X4s and 2X6s are selling and thus stumpage prices are consistently down $40 - $60/MBF, with landowners now receiving $130 - $160/MBF.
Pulpwood and firewood prices remain fairly consistent when compared to recent averages. Local log-buying brokers have experienced an up-and-down summer with some yards processing significant volumes and others very little.
Lastly, after years of waiting, we are finally seeing heightened and consistent interest from wood buyers in securing Forest Stewardship Council (FSC) certified wood - that which we produce on our certified woodlots. Within the last six months wood buyers from SAPPI Fine Papers in Hinckley, NewPage Corp. in Rumford, and Verso Paper in Jay all called looking for the FSC-certified pulpwood. Given that we sell stumpage, we are able to market this wood to mills, if they contract for the logging service directly, or when stumpage is sold to certified Master Loggers, as they can document the necessary chain-of-custody.
Finally, in yet another see-saw development that left mill workers dejected and then elated, a pulpmill folded, only to quickly reopen under different ownership. During the fall 2006, Georgia-Pacific closed its mill in Old Town, though in spring 2007 Red Shield Environmental LLC bought the plant, reignited the mill's biomass boiler, and is once again generating power from wood. However in a potentially more significant development, RSE announced plans to create a biorefinery and convert pulp-making byproducts into fuels. As a first step, RSE announced the restart of some of the mill's pulping machines, as a means to generate income and byproducts. The hardwood pulp will/is being sold to papermakers, and the University of Maine has received $10 million to help learn how to convert the byproducts into ethanol, and other products now made with oil.